Wednesday, August 7th, 2013

Easy Year End Accounting Clean Up!

By Ellen Rohr on Jan 30 2013 • Filed under Business,Money

Clean up your accounting methods and start your business year off on the right foot. (Photo)

It's a brand new year and a fresh new slate awaits. Take some time now to shed the accounting and financial garbage you don’t need that's been dragging you down.

Here are this year’s top “Clean Up Tips” for streamlined financials and clearer score keeping:
 
Sit side-by-side with every person in your office who enters data. You will probably discover:
 
  • Redundant entries.
  • Entry fields that populate reports that no one ever looks at.
  • Too much detail in the notes section. 
  • Not enough information in the essential fields. 
Establish a “blame free” approach to cutting out any unnecessary steps. I am just too old to care whose fault it is, how we got into this mess or what we have been living with since so-and-so left. You are too old for that, too. It doesn’t matter.
 
Sit side-by-side and ask team members questions like:
 
  • “What do we do that you think may be a waste of time…yours and mine?” 
  • “What are we not doing that we may be well served to start doing, or restart?” 
You can learn so much by asking those questions. Then…
 
Write or update your procedures for basic Income and Outgo.
 
The procedures listed below encompass 80-90% of all the accounting and are often where the bottlenecks develop. Keep the systems simple enough to be current at least once every week with all the entries:
 
  • Entering Customer Invoices
  • Applying the Customer Payment
  • Making the Deposit
  • Entering Bills
  • Paying Bills
  • Entering Credit Card charges
  • Paying the Credit Card statement
  • Entering the Payroll Journal Entry
Have the people who enter the data write or edit the Procedures. Then, you can review and make edits and update your Manuals. It’s even easier when two people work together. One does the entry; the other writes down the Procedure.
 
Route “fixes” through the Income Statement.
 
As you and your CPA nail down the Account balances, make adjustments as needed via and Income or a Cost account. The Income Statement starts over every year. The Balance Sheet ending balances are the beginning balances for the next year. Clean up the Balance Sheet Accounts as you wrap up year end and send the “fix” through the Income Statement. The adjusting entry will impact Profit, which is the link between the Balance Sheet and the Income Statement. Leave clues in the Memo and Description line of your entries that will help you remember what you did and why when you are reviewing data in the future. Neat!
 
Get rid of excess Accounts.
 
Could you lump all phone expenses, for example, into one account? Sure. Because you can always review the Transaction Register for details, or take a look in the Phone file in the file cabinet. 
 
Commit to a once a month review of the financials with a fine tooth comb.
 
Go line by line down the Balance Sheet and Income Statement (P&L) and ask ask ask questions and drill down on the associated transactions for each account. It’s your money and your responsibility. Pay attention. 
 
This year’s Clean Up Tips are my gift to you. And a challenge to you! Simplify your scorekeeping. Get current on your reporting. Move into the next year without this year’s accounting baggage. That leaves you and your team free and clear to go go grow!
 

 
Ellen Rohr, owner of Bare Bones Biz, nearly sank her own family’s business. Then she learned how to keep track of the money and make more of it. Since then, she has helped thousands of biz builders start, fix and grow their companies. For a free Month End Checklist, "like" her Facebook Page and send  your request Facebook. She also offers free business planning videos on her website.

 

 


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